'Unclaimed' money grab to be cut

Jonathan Swan and Fergus Hunter

The Abbott government will reverse Labor's policy of taking money from people's ''unclaimed'' bank accounts after just three years.

The money-siphoning policy, designed in 2012 when former treasurer Wayne Swan was keeping alive his promise of delivering a string of budget surpluses, has angered consumers who found their money had vanished from savings accounts after what they considered a short period of inactivity. Interviews conducted this week by Fairfax Media quoted elderly Australians who were shocked to discover their savings had been taken by the government.

Senior government sources say the Coalition is now certain to scrap Labor's three-year policy, which collected $520 million for the budget in 2012-13.

The only question being debated is how long an account should remain dormant before the government intervenes. Either five years or seven years is considered most likely but the government will reserve judgment until Finance Minister Mathias Cormann has finished consulting with consumers and the banking sector.

Opposition Leader Bill Shorten, financial services minister at the time of the change, stands by his policy on unclaimed savings, pitching it as a consumer protection measure. So does shadow treasurer Chris Bowen, although he acknowledges one concern. He says Labor has written to ASIC - the organisation that collects the ''unclaimed'' savings - to ask why ''it is taking so long for some consumers to claim their money back''. Mr Bowen blames this on the government's budget cuts to ASIC.

''This is about protecting people's savings to ensure it's not eroded by bank fees and changes,'' Mr Shorten said.

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But several Labor shadow ministers are privately embarrassed about the policy and when asked about it one frontbencher thought the bank policy was still seven years. Others wished Mr Shorten would stop feeling beholden to a policy designed in financially troubled circumstances.

One opposition frontbencher compared the bank siphoning policy with the Gillard government's ''wrong'' decision to cut welfare payments for thousands of single mothers.

The Coalition has been critical of the policy since it was announced. Senator Cormann calls it ''bad policy'' by a government ''desperate for more cash because they made such a mess of the budget''.

Senator Cormann released a discussion paper in May and says he has ''received a lot of feedback from people right across Australia who are very unhappy about this attack on their bank accounts''.

While the consultation period remains open, the Coalition is committed to undoing the policy. This will come with the enthusiastic backing of the banks, but consumer groups are divided.